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GST Reconciliation Issues

GST Reconciliation Issues

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Recently GST department has issued lots of notices wherein the main reason behind was the mismatch of ITC claimed from that available.These notices left the assessees perplexed and will certainly land most of them in trouble in near future .In this post we will try to analyse the reason behind such notices,how to avoid them and certainly how to deal with them

Reasons:

a) There is difference in credit claimed in GSTR 3B from that claimed in GSTR 1

b) The credit available in 2A is not matching with credit claimed in GSTR 3B or GSTR 1

It is possible when one misses any sales/service to be reported(excess credit claimed) or when the entity misses to report sales return (short credit claimed)

c) Difference due to mismatch in transitional credit forms from that available in system as against earlier returns filed(in VAT regime) or as available in input credit documents(bills ,invoices etc)

Here we will deal with (a) and (b) above as the transitional credit issues are now of only academic interests since more than one year has been passed since implementation of GST and all the notices if any must have been dealt with on the issue in (c) above

How do the mismatch arises:

Now as we already know GSTR 3B is a summary return showing tax liability,sales,purchase etc and GSTR 1 is for gross outwards sales so what happens when one files its GSTR 1 return is that the GSTR 2A gets auto populated for each GSTIN of its purchaser.

For eg A sells any products to 3 persons B,C,D having GSTIN with 1000,2000,3000 GST charged so the system will create 2A for B,C and D with each having corresponding ITC available in their credit ledger with 1000,2000 and 3000 respectively.Now suppose B while filing his GSTR 1 or GSTR 3B claims 1500 as ITC the system will generate a mismatch notice .The notice will also be there if B claims the wrong credit in any of the GSTR 3B or GSTR1

How will the department inform:

The notice will be generated in the user login in form GST ASMT 10

What will the form contain:

a) Observations of the officer: Generally this will contain nature of difference

b)Time available to the taxpayer to give his explanation in response to this notice: In all cases this will not exceed 30 days

c)Tax amount that is different

What to do when the notice is generated:

a) Check whether the notice is correct

This means the difference may be due to the fact that the seller has wrongly reported your details .If this is the fact then collect the actual details such as the invoice and customer confirmation

b) File your reply within the due time in GST ASMT 11 form

c) Wait for the acceptance or rejection in GST ASMT 12 on the portal.

d) Effect if the notice is correct:

There may be unintentional mistakes so try to accept your errors ASAP and in this case the excess ITC claimed will be added to the current month liability along with the interest from the date ITC claimed to current date

In case of short credit claimed as explained in (b) above the credit is added to current month credit

For GST ASMT 10,11,12 see below

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